Clinton Cards’ new owner American Greetings expects the retailer to return to profit by 2015.
On an analysts call when the US giant posted its first quarter update last week, the American Greetings said it would be investing up to $20m (£12.7m) in the next 18-24 months in Clinton Cards to help the turnaround.
It said it expects to deliver an operating profit during the fiscal year 2014 and “for the new business to be accretive to our consolidated earnings by fiscal 2015”.
The group forecasted a net increase in American Greetings’ annual revenue of $265m (£169.3m) but it added this will depend on the final number of stores acquired as the company renegotiates leases with store landlords. It acquired 400 stores when it bought the business last month.
The strategy developed by the new team, which is made up of individuals across American Greetings and Schurman Retail Group – which American Greetings has a 15% stake in - includes re-evaluating the overall product offering within the stores as well as merchandising.
American Greeting chief executive Zev Weiss said: “We have been very impressed by a leadership team which not only makes quick decisions, but also we have been impressed by their merchandising capabilities as manifested in their highly productive Papyrus retail stores.”
But independent retail analyst Nick Bubb who was on the call said: “It is not clear what will happen if the new management don’t get big rent reductions, as that seems to be a major part of the plan to limit the Clintons trading loss to $10m (£6.4m) this year and then turn it into decent profit again within two years, even if there are plans for improved merchandising and ranges.”
American Greetings acquired Clinton Cards out of administration last month after buying its debt. Clinton Cards had been struggling under a pile of debts in the competitive card market.